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Income required to buy a home rises by almost a quarter since 2015

The minimum income first-time buyers require to purchase a home in the UK has rocketed by 18% in the past three years, according to Hometrack.

Recent figures from its UK Cities House Price Index show first-time buyers need to earn, on average, £53,000 to buy a home in the UK’s 20 largest cities, up 18% from £45,000 in 2015. The income to buy ranges from £25,000 in Liverpool to £82,000 in London.

The data underlines how wages have been outstripped by house price growth over the past three years, making homeownership less achievable for those on lower incomes. In fact, house prices have risen by an average of 14.5% since 2015, while average wages have grown by just 7.5% to £489 a week over the same period, according to the Office for National Statistics.

With this, buyers in Bristol and Manchester must now earn a minimum of £58,826 and £34,770 respectively to get on the housing ladder – a 24% increase in three years.

Buyers in Aberdeen, on the other hand, now need just £34,262 to buy their first home – down £5,388 (or 14%) compared to three years ago. This is due to house prices falling 17% to £164,800 in that time.

House prices in the UK’s largest 20 cities have grown by an average of 3.9% in the year to August, with the fastest growing cities the most affordable. Price growth in Liverpool and Glasgow – where property tends to be pretty cheap – has risen by 7.5% and 7.2% respectively over the past year, the fastest of any UK cities.

Meanwhile, just three cities experienced price drops in the year to August: Cambridge, London and Aberdeen, falling by 0.1%, 0.3% and 3.7% respectively.

Richard Donnell, insight director at Hometrack, said that house price growth continues to outpace earnings across 16 of the 20 cities as ‘buyers continue to bid up’ the cost of housing on the back of low mortgage rates and high levels of employment.

“Cities like London and Cambridge require the highest incomes to buy a home and as a result they are registering flat to falling prices. Meanwhile, cities like Bristol and Bournemouth are starting to register slower growth as affordability pressures increase.”

He added: “Higher prices and a further drift upwards in mortgage rates mean that these affordability pressures will continue to steadily build. However, there are many cities where affordability remains attractive and prices are expected to continue their upward trend.”

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